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Understanding Scope 3 Emissions

Scope 3 emissions are all indirect emissions (not included in Scope 2) that occur in your value chain, both upstream and downstream. According to the GHG Protocol Corporate Value Chain Standard, Scope 3 includes 15 categories: 
┌─────────────────────────────────────────────────────────────────────────────┐
│                       SCOPE 3: Value Chain Emissions                         │
├─────────────────────────────────────────────────────────────────────────────┤
│                                                                              │
│  UPSTREAM EMISSIONS                    DOWNSTREAM EMISSIONS                  │
│  (Before your operations)              (After your operations)               │
│  ─────────────────────────             ─────────────────────────             │
│                                                                              │
│  Cat 1: Purchased goods & services     Cat 9: Downstream transportation     │
│  Cat 2: Capital goods                  Cat 10: Processing of sold products  │
│  Cat 3: Fuel & energy activities       Cat 11: Use of sold products         │
│  Cat 4: Upstream transportation        Cat 12: End-of-life treatment        │
│  Cat 5: Waste generated                Cat 13: Downstream leased assets     │
│  Cat 6: Business travel                Cat 14: Franchises                   │
│  Cat 7: Employee commuting             Cat 15: Investments                  │
│  Cat 8: Upstream leased assets                                              │
│                                                                              │
└─────────────────────────────────────────────────────────────────────────────┘
Why Scope 3 MattersFor most organizations, Scope 3 represents 70-90% of total emissions. Understanding and managing your value chain emissions is essential for:
  • Complete carbon footprint - Required for meaningful climate commitments
  • Science-based targets - SBTi requires Scope 3 if it’s >40% of total
  • Supply chain engagement - Identify and work with high-impact suppliers
  • Risk management - Understand exposure to carbon pricing and regulations

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Prerequisites

Before calculating Scope 3 emissions, ensure you have:
Start Where You Have DataYou don’t need to track all 15 categories immediately. Start with:
  1. Category 1 (Purchased goods) - Often the largest
  2. Category 6 (Business travel) - Usually easiest to track
  3. Category 7 (Employee commuting) - Important for office-based companies
Then expand to other relevant categories based on your business model.

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Scope 3 Categories Overview

The following table shows all Scope 3 categories, their typical relevance by industry, and availability in Dcycle:
CategoryNameTypical % of Scope 3Dcycle Status
1Purchased goods and services40-80%✅ Available
2Capital goods5-15%✅ Available
3Fuel and energy-related activities5-15%✅ Available
4Upstream transportation5-20%✅ Available
5Waste generated in operations1-5%✅ Available
6Business travel1-10%✅ Available
7Employee commuting1-5%✅ Available
8Upstream leased assets1-5%🔄 Coming soon
9Downstream transportation5-15%✅ Available
10Processing of sold productsVariable🔄 Coming soon
11Use of sold products10-50%✅ Available (LCA)
12End-of-life treatment1-5%✅ Available (LCA)
13Downstream leased assetsVariable🔄 Coming soon
14FranchisesVariable🔄 Coming soon
15InvestmentsVariable✅ Available

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Category Guides

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Category 1: Purchased Goods and Services

Category 1: Purchased Goods and Services

Track emissions from purchased raw materials, components, goods, and services. Typically the largest Scope 3 category for most organizations.Methods available:
  • Spend-based (Exiobase 3.8.2)
  • Activity-based
  • Supplier-specific (EPDs/PCFs)

Category 2: Capital Goods

Track emissions from purchased capital goods and fixed assets. Important for organizations with significant infrastructure investments.Methods available:
  • Spend-based (Exiobase 3.8.2)
  • Activity-based (physical quantities)
  • Supplier-specific (EPDs for equipment/buildings)
Amortization ApproachesThe GHG Protocol allows two approaches for reporting capital goods:
  1. Full accounting in year of purchase - Report all emissions in the acquisition year
  2. Depreciation approach - Spread emissions over the asset’s useful life
Dcycle supports both approaches. Contact support for guidance on which method fits your reporting needs.

Category 3: Fuel and Energy-Related Activities

Upstream emissions from fuels and electricity—automatically calculated when you upload Scope 1 and Scope 2 data.Includes:
  • Well-to-Tank (WTT) emissions for fuels
  • Upstream electricity generation
  • Transmission & distribution (T&D) losses
Category 3 emissions are automatically calculated by Dcycle. No additional input required—just ensure complete Scope 1 and Scope 2 data.

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Category 4: Upstream Transportation and Distribution

Category 4: Upstream Transportation

Track transportation of purchased goods from suppliers to your facilities, including:
  • Road, rail, air, and maritime transport
  • Third-party logistics providers
  • Inbound logistics

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Category 5: Waste Generated in Operations

Category 5: Waste Generated in Operations

Track emissions from disposal and treatment of waste generated at your facilities:
  • Landfill, incineration, recycling, composting
  • LER codes (European List of Waste)
  • Treatment method (R/D codes)
  • Transport to treatment facilities

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Category 6: Business Travel

Category 6: Business Travel

Track emissions from employee travel for business purposes:
  • Flights (domestic and international)
  • Rail and train travel
  • Rental cars and taxis
  • Distance-based calculations

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Category 7: Employee Commuting

Category 7: Employee Commuting

Track emissions from employees traveling between home and work:
  • Survey-based data collection
  • Transport mode breakdown (car, train, bus, bike)
  • Remote work and hybrid work patterns
  • Carpooling support

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Category 9: Downstream Transportation and Distribution

Category 9: Downstream Transportation

Track transportation of sold products from your facilities to customers, including:
  • Outbound logistics (customer-arranged)
  • Distribution to retailers
  • Last-mile delivery
For logistics service providers or detailed API documentation, see the Logistics Tutorial.

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Categories 11 & 12: Use and End-of-Life of Sold Products

Life Cycle Assessment (LCA)

Track emissions from the use phase and end-of-life treatment of products you sell. Requires product-level LCA data.

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Data Quality and Methodology

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GHG Protocol Data Quality Hierarchy

The GHG Protocol recommends improving data quality over time: 
Level 1: Supplier-Specific Data ────────────────────────────── HIGHEST QUALITY
├─ Primary data from suppliers (EPDs, PCFs)
├─ Verified and specific to your supply chain
└─ Goal: 50%+ of Category 1 emissions

Level 2: Hybrid Data ──────────────────────────────────────── HIGH QUALITY
├─ Activity data × Secondary emission factors
├─ Physical quantities with industry-average factors
└─ Goal: 30%+ of remaining emissions

Level 3: Spend-Based Data ─────────────────────────────────── MEDIUM QUALITY
├─ Financial data × EEIO factors
├─ Broad coverage but lower accuracy
└─ Starting point for comprehensive coverage

Level 4: Extrapolated Data ────────────────────────────────── LOWER QUALITY
├─ Estimated from incomplete data
├─ Use for minor categories only
└─ Replace with better data as available
Continuous ImprovementTrack your data quality score over time:
  • Year 1: Achieve comprehensive coverage (even if spend-based)
  • Year 2: Move top 10 categories to activity-based
  • Year 3: Engage key suppliers for specific data
  • Year 4+: 50%+ supplier-specific data for Category 1

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Getting Started

We recommend starting with the most impactful and accessible categories:
1

Category 1: Purchased Goods

Start with spend-based for broad coverage, then improve data quality for high-impact purchases.Go to Category 1 Guide →
2

Category 6: Business Travel

Usually the easiest to track with high accuracy using booking systems data.Go to Business Travel Guide →
3

Category 7: Employee Commuting

Conduct employee surveys or use distance-based estimates.Go to Employee Commuting Guide →
4

Categories 4 & 9: Transportation

Track logistics for both inbound and outbound goods.Go to Logistics Tutorial →
5

Category 5: Waste

Track waste generated at your facilities.Go to Facilities Tutorial →

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Next Steps

Category 1: Purchased Goods

Start with your largest emission source

Supply Chain Tutorial

Complete supply chain management

Logistics Tutorial

Track transportation emissions

Custom Emission Factors

Use supplier EPDs and PCFs